davi...@mac.com wrote:
> Selling puts is a good move if you're bullish...I would recommend a)
> go for short timeframes (ie. Jan 09 is not a great idea, go for apr or
> jul), and b) use a put spread, or more succinctly, use some of the
> cash you get from selling a put to buy a lower price, further out of
> the money put to protect your downside.

> I had a $180/$160 Put spread (sell the $180, buy the $160) on for this
> past January which netted me a $9.50 credit in October.  As we blew
> through $180 and onto $200, I could have closed out the position for
> around $2 in Dec but passed.  I was thinking there was no WAY we would
> ever see my approx. $171 break even when we were sitting above $190.
> Well, you know the story--we were sitting under the $160 level and I
> was looking at a max loss on the trade.  Man was I glad to have the
> downside $160 puts as this thing tanked.  As we went under $150, I was
> relatively calm thinking I'm already at max loss (thanks to my
> spread), so I'll stick it out and see if I can do better before I
> exit.  I was able to get out at an approx. $7 debit--I think it was
> expiration day, I sold into the am strength.  If I hadn't had the
> downside protection at $160 (ie. naked at $180), I would have panicked
> at $150 and sold, taking a much bigger loss than I ended up with on
> this trade.  Use spreads, especially when betting against downward
> movement.  Downdrafts tend to be quicker and more severe, so don't
> leave your butt swinging in the wind...protect it.  Word to the wise.